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Sales of Products

12 Months Ended

Dec. 31, 2023

13. Sales of Products

Our products consist of both gold flotation concentrates which in 2023 and 2022 we sold to a broker, H&H Metals Corp., and an unrefined gold-silver product known as doré which we sell to a precious metal refinery. Revenue is recognized upon the completion of the performance obligations and transfer of control of the product to the customer, and the transaction price can be determined or reasonably estimated.

For gold flotation concentrate sales, the performance obligation is met when the transaction price can be reasonably estimated, and revenue is recognized generally at the time when risk is transferred to H&H Metals based on contractual terms. Based on contractual terms, the Company has determined the performance obligation is met and title is transferred to H&H Metals when the Company receives its first provisional payment on the concentrate because, at that time, 1) legal title is transferred to the customer, 2) the customer has accepted the concentrate lot and obtained the ability to realize all of the benefits from the product, 3) the concentrate content specifications are known, have been communicated to H&H Metals, and H&H Metals has the significant risks and rewards of ownership to it, 4) it is very unlikely a concentrate will be rejected by H&H Metals upon physical receipt, and 5) we have the right to payment for the concentrate. Concentrates lots that have been sold are held at our mill up to 60 days, until H&H Metals provides shipping instructions.

Our concentrate sales sometimes involve variable consideration, as they can be subject to changes in metals prices between the time of shipment and their final settlement. However, we can reasonably estimate the transaction price for the concentrate sales at the time of shipment using forward prices for the estimated month of settlement, and previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement for financial reporting purposes. The embedded derivative contained in our concentrate sales is adjusted to fair value through earnings each period prior to final settlement. It is unlikely a significant reversal of revenue for any one concentrate lot will occur. As such, we use the expected value method to price the concentrate until the final settlement date occurs, at which time the final transaction price is known. At December 31, 2023, metals that had been sold but not final settled included 5,176 ounces of gold of which 3,320 ounces were sold at a predetermined price with the remaining 1,856 ounces exposed to future price changes. The Company has received provisional payments on the sale of these ounces with the remaining amount due reflected in gold sales receivable.

Sales and accounts receivable for concentrate shipments are recorded net of charges for treatment and other charges negotiated by us with H&H Metals, which represent components of the transaction price. Charges are estimated by us upon transfer of risk of the concentrates based on contractual terms, and actual charges typically do not vary materially from our estimates. Costs charged by the customer include fixed treatment, refining and costs per ton of concentrate and may include penalty charges for lead and zinc content above a negotiated baseline as well as excessive moisture.

For sales of doré and of metals from doré, the performance obligation is met, the transaction price is known, and revenue is recognized at the time of transfer of control of the agreed-upon metal quantities to the customer.

Sales of products by metal for the years ended December 31, 2023 and 2022 were as follows:

	2023			2022
Gold	$	14,308,098		$	10,173,034
Silver		55,747			25,370
Less: Smelter and refining charges		(707,112	)		(618,215	)
Total	$	13,656,733		$	9,580,189

Sales by significant product type for the years ended December 31, 2023 and 2022 were as follows:

	2023		2022
Concentrate sales to H&H Metals	$	13,518,628	$	9,276,573
Doré sales to refineries		138,105		303,616
Total	$	13,656,733	$	9,580,189

In 2023, flotation concentrates sold to H&H Metals accounted for 99% of all gold sales. The remaining 1% in 2023 was doré sold to a third party. In 2022, flotation concentrates sold to H&H Metals accounted for 97% of all gold sales. The remaining 3% in 2022 was doré sold to a third party. At December 31, 2023 and 2022, our gold sales receivable balance related to contracts with customers of $1,038,867 and $909,997, respectively, consist only of amounts due from H&H Metals. There is no allowance for doubtful accounts. We have determined our contracts do not include a significant financing component. For doré sales, payment is received at the time the performance obligation is satisfied. Consideration for concentrate sales is variable, and we receive payment for a significant portion of the estimated value of concentrate parcels at the time the performance obligation is satisfied.